The Conservatives yesterday greeted reforms of the asylum system by lambasting the Government for "lamentable failures" over the past four years. Oliver Letwin, the shadow Home Secretary, mocked Tony Blair for claiming 18 months ago that severe difficulties and delays in the procedures were "being sorted out".

After David Blunkett, the Home Secretary, announced major reform of support for asylum-seekers, Mr Letwin told MPs that Mr Blair's statement contrasted sharply with the Government's acknowledgement that the "whole system is a complete mess".

He asked Mr Blunkett: "Do you now accept that the mess we have today is in great part due to the failures of your predecessor to respond effectively to the sustained criticism to the system of vouchers and of very wide dispersal, from these benches and from highly respected organisations throughout the country?"

Mr Blunkett told MPs controversial vouchers paid to asylum seekers instead of cash would be abolished. Instead, up to 3,000 places will be made available in new accommodation centres and new secure "removal centres" will be set up for asylum-seekers facing deportation. All asylum-seekers will also be given smart cards bearing their photograph and fingerprints to cut fraud.

Mr Letwin said providing a safe haven for the oppressed was "one of the highest duties of the British state", and to detain more than 300 people for more than 100 days without even an initial review of their case was scandalous.

"The whole country will hope the Home Secretary has at last begun to address the problems that the Government has so far lamentably failed to address," Mr Letwin said. "The whole country will hope your proposals will establish a civilised humane and effective system." Ann Widdecombe, the previous shadow Home Secretary, joined MPs backing the review, describing the measures as a "Damascene conversion".

Simon Hughes, the Liberal Democrat home affairs spokes-man, said the proposals deserved a "huge welcome" but Labour's 1999 Asylum and Immigration Act had been a disaster. He said: "Isn't today's announcement an admission, albeit belated, that the voucher system was not only degrading and inefficient, both in deterring people and in costing more than alternatives?"

"Does the announcement of the replacement of vouchers with smart cards herald a general movement to entitlement cards not just for immigrants but for people as a whole?"

Mr Blunkett said the voucher system would be superseded by smart cards next September. "We are intent on ensuring we have a humane and acceptable system that treats people well, speeds their applications but ensures, if they are granted leave to remain or refugee status, they are integrated fully and properly into the community."

Chris Mullin, Labour chairman of the Commons Home Affairs Select Committee, questioned whether the new smart cards would work "given the unhappy history of government information technology projects".

Mr Blunkett said: "The history of the Home Office on technology has not been one of the greatest and we are painfully aware of that, having sorted out the question of passports and other hiccups. But having learnt that lesson we are very clear indeed that by phasing this in from January we can not only make it work but make it work so much better than the present letter system which is grossly open to fraud."